“Hello Melanie—this house is in a multiple offer situation. Deadline for highest & best is Wednesday at 9am. I’ve attached the multi offer form for you. Thank You.”
That is a copy of an email I received the other day in reference to a bank-owned home that my buyers had made an offer on. If I looked through my inbox, I could probably find 20 more emails with very similar wording. Multiple offers…highest and best…they are 100% back.
Highest and Best. Three words that buyers dread to hear. It means that all potential buyers have one shot to put their best offer forward to purchase a property.
It means that the buyers have to lay all their cards on the table and hope they have the best hand. It is high stakes real estate poker, except you can’t see your competition or their stack of chips. It is, knowing when to hold ‘em and knowing when to fold ‘em and trying not to look back with regret.
As a Realtor, highest and best situations are challenging to advise on. It is not our pile of chips, it is the buyers. The decision to go “all in” has to be made by the buyer. That doesn’t mean that I don’t give buyers advice on how to navigate these situations. Of course I do!
Here are my 5 tips for handling highest & best situations
1) Do Your Research!
Your real estate agent should be able to pull recent comparables for you to help determine what the fair market value for the coveted home is. Compare these properties closely with the one syou want and see where it falls, in your opinion, in the price spectrum. The reason "your" is bolded is because different people value things in a home more than others. If you don’t care that a home has a pool then your value for that pool will probably be lower than a buyer who really wants a pool. All of this brings me to #2.
2) Know What You Need and What You Want!
Highest and best decisions usually have to be made pretty quickly. Therefore, it is imperative that you really know what you need and what you want and how much those things are valued to you. I recommend to buyers to make a list of 10 things that they need or want. Rank them in order of importance. If this house has all of your needs and a good portion of your wants, then it may be time to go “all in.” Don’t hesitate.
3) What Do You Mean By Going “All In?”
“All in” is offering the purchase price that you can, 1.) Afford—talk to your lender, 2.) Feel good about if you get the house, and 3.) Not regret it if you don’t get the house because you didn’t want to pay any higher. Figuring out that number is really hard for a lot of buyers. It is the #3 that trips them up. Buyers don’t want to regret losing a house over $1000. So what do you do? Trust yourself, trust your decision, and know that going “all in” is a risk that may pay off and may not.
4) Don’t Forget The “Best”
Yes, the purchase price holds the most weight for the sellers that are comparing the offers, but what if the purchase prices of several offers are really similar? Then how does the seller make the decision? This is when your “best” terms come into play. There are escrow deposits, closing dates, financing contingencies, home warranties, inspections, repair limits, and more. There is a lot that you can do with those that make you stand out from others. Every seller is different. Talk to your agent about how to package these other terms to appeal to an individual seller.
5) Don’t Let Your Desire To Win Cloud Your Judgment
Here is my obvious observation of the day: People like to win. Highest and best situations can bring out the competitor in even the most sensible buyers. It is important to not let the competition itself cloud the way you truly feel about the house. Go back to #2 and, as impartially as possible, go over your list. Talk with trusted advisors if needed and don’t be afraid to fold ‘em.
Melanie Atkinson is a Realtor with The Wood Team at Coldwell Banker. She can be reached at Melanie@woodteamrealty.com or 813-368-6084
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